The honest truth about where property prices are headed in 2024

There is no doubt that we’re now one year into a new property cycle and many housing markets around Australia are likely to experience significant  growth over the next year driven by a confluence of factors that will underpin  strong demand for well located properties.

After a short sharp cyclical slump in 2022  property prices have regained much of their lost ground in 2023.

So let’s look back at the history of property prices to help you look forward.

Firstly it’s important to recognise that property is a long term investment and value growth compounds over time, so it’s fair to say that the sooner you start investing in property, the better you’ll end up financially.

Now that’s not fair!

This is what I can hear new investors say.

Of course, I can understand your frustration if you see our property markets surging ahead and you don’t have the funds to get a foot on the property ladder.

And to compound it somewhat, I’ll share with you this titbit of information one of my mentors taught me many years ago…

The best time to get into real estate was 20 years ago.

However, I would add:

The second best time is today.

Of course, who wouldn’t like to buy their parent’s house for the price they paid for it years ago?

Until we master the scientific breakthrough of time travel, it’s not possible to go back in time and buy property while it’s still “cheap”.

But if that were possible, we could snag some absolute bargains.

If we take a look back at what real estate prices were like a few decades ago, the facts and figures are eye-wateringly appealing.

How I started investing in the early 1970’s

In 1973, the median house price in Sydney was just $27,400.

Renting would cost you an average of $26 per week, and according to the Australian Bureau of Statistics (ABS), the average weekly wage was $111.80.

Buying a house at this time in Brisbane cost $17,500 and in Melbourne, it would set you back $19,800.

Silver Lining

The first property I bought in Melbourne in the early 1970’s cost me $18,000.

I went halves with my parents and we got $12 a week in rent – and we were excited!

And if you were to purchase the average house in Canberra back then, it would cost you around $26,850, whereas a house in Hobart would’ve seemed a steal at the low median of $15,200.

As for Perth and Adelaide, the housing market was affordable with a median of $26,850 and $16,250, respectively.

Compare that with the pricing of houses these days, and it’s a vastly different story.

According to  housing data from CoreLogic, median house values at the end of December 2023 were:

  • Sydney — $1,128,322
  • Canberra — $843,171
  • Brisbane — $787,217
  • Melbourne — $780,457
  • Adelaide — $711,604
  • Hobart — $656,947
  • Perth — $660,754
  • Darwin — $496,309

The first thing we can deduce…

In the space of 50 years, all capital cities have recorded massive price growth.

Some have performed better than others, clearly.

But the fact remains that anyone who bought a property in 1973 and still owns it now, has profited very handsomely from their investment.

The second thing we can deduce?

Time in the market, not timing the market, is a surefire strategy for success when you’re building wealth for your future.

There are a number of factors that influence property prices, but in particular, our population growth, the increasing wealth of our nation, and falling interest rates over the years (excluding the last  couple of years) have driven up real estate values.

But things have changed recently...

  • Inflation is under control, but will still remain relatively high for a few years yet.
  • While interest rates may have peaked, they are still higher than they’ve been for a while.
  • Wages growth is not keeping up with inflation.
  • Banks are still making it hard to borrow because they need to add 3% to the current interest rate to assess your borrowing capacity.

So can property values still keep growing?

That’s a good question, considering there are still many economic headwinds that will affect us as some parts of Australian industry.

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